A massive K1.5 billion loss for PNG Government owned Oil and Gas company

Papua New Guinea Government-owned oil and gas company Kumul Petroleum Holdings Limited made a massive loss of K1.5 billion in the 2017 financial year, according to its annual report.

And when the Government was asked to comment yesterday, there was no response as of late yesterday, over the document that has been made public.

It also showed that after receiving LNG revenue totaling K1.8 billion in 2016, Kumul still recorded a massive K481 million loss for the year.

These figures were yesterday highlighted by the opposition leader Patrick Pruaitch, who described them as “scandalous” citing the O’Neill government’s K3 billion UBS loan as the cause among others. He said that Kumul’s consolidated accounts disclosed that following the 2016 loss, the UBS collar loans were extinguished in 2017 at a cost of US$842,423,000 (K2.8 billion), part of which could have been offset by the prevailing value of the Oil Search shares.

He said this was mismanagement of the country’s economy by the O’Neill government through a series of bad and corrupt decisions, the latest of which included the airlifted importation of the Italian-made Maserati cars.

“More money has been lost in this foolhardy transaction that the entire annual budget for either health or education and yet there has been a zero level of accountability,” he said. He said that K2-3 billion in APEC expenditure has also not been accounted for even though the 2018 Budget accounts had been closed.

“It would take many years to recover from a loss of that scale. Prime Minister Peter O’Neill and Treasurer Charles Abel both promised in September 2017 that Kumul Petroleum would disclose full details of this transaction in Parliament, but this has not happened,” he said.

Mr Pruaitch said he did not believe the losses indicated by the 2017 KPHL annual report represented the total financial losses because it excluded the original transaction costs prior to responsibility for purchase of 149 million Oil Search shares and UBS loan liabilities being passed on the company. There have been suggestions these transaction costs, which had no oversight from either Treasury or the Attorney General’s Department, could have been as much as A$200 million.

“The government wants to hide the truth, and the extraordinary level of losses, caused by these transactions,” Mr Pruaitch said, noting that Kumul Petroleum was the only State-owned enterprise that reported to the PNG Prime Minister. Post Courier/Statement